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The threat of even more devastating downturns looms if the euro zone does not get to grips with its debt crisis and U.S. lawmakers fail to agree a spending-reduction plan, the Organization for Economic Cooperation and Development warned.

In the absence of decisive action from euro zone leaders, the European Central Bank (ECB) alone has the power to contain the bloc's crisis, the Paris-based OECD said. In the United States, however, the Federal Reserve had little ammunition left.

While solid growth in big emerging economies would provide a boost, slumping global trade would drag on Chinese output, the OECD said.

Its twice-yearly Economic Outlook forecast world growth would slow to 3.4 percent in 2012 from 3.8 percent this year.

That marks a sharp fall from its previous outlook in May, when the OECD estimated the world economy would grow 4.2 percent this year and 4.6 percent in 2012.

Struggling to contain an unprecedented debt crisis, the euro zone has already entered a recession and will eke out growth of only 0.2 percent in 2012, the OECD said, slashing its forecast from 2.0 percent in May.

CENTRAL BANKERS TO THE RESCUE?

The OECD said many key questions about the euro zone's response to the debt crisis remain unresolved, raising doubts about even the bloc's most solid economies, as demonstrated by Germany's difficulties placing bonds with investors last week.

"What we see now is contagion rising and hitting probably Germany as well," OECD chief economist Pier Carlo Padoan told Reuters in an interview.

"So the first thing, the absolute priority, is to stop that and in the immediate the only actor that can do that is the ECB," he added, urging the central bank to commit to a creating a cap on government bond yields as a way of calming the crisis.

With the Federal Reserve already flooding the financial system with liquidity, the U.S. central bank has even less room to act if the world's biggest economy hits a downturn. That prospect was made all the more real by the failure of Congress to agree a deficit-reduction plan, without which deep spending cuts would be triggered.

"The resulting fiscal tightening, which would come automatically, would in our view likely generate a recession in the United States," Padoan said.

Provided that the Congress does reach an agreement, then the U.S. economy is set to grow 1.7 percent in 2011 and 2.0 percent in 2012, down from May forecasts of 2.6 percent and 3.1 percent respectively.

With world trade growth projected to slow to 4.8 percent in 2012 from 6.7 percent this year, even China would not be spared a sharp slowdown, the OECD said.

It forecast that growth in the emerging Asian economic power would slow to 8.5 percent in 2012 from 9.3 percent in 2011.

Slower global trade and confidence knocked by the euro zone's debt crisis could trip up Germany, which the OECD estimated would grow only 0.6 percent in 2012 after a 3.0 percent expansion in 2011. Europe's biggest economy has probably entered a shallow recession at the end of the year, the OECD said.

In a rare bright spot, the Japanese economy was seen rebounding sharply after this year's earthquake and tsunami to achieve growth of 2.0 percent in 2012 following a contraction of 0.3 percent in 2011.

(Editing by Daniel Flynn and Catherine Evans)

Germany's original plan was to try to secure agreement among all 27 EU countries for a limited treaty change by the end of 2012, making it possible to impose much tighter budget controls over the 17 euro zone countries -- a way of shoring up the region's defenses against the debt crisis.

But in meetings with EU leaders in recent weeks, it has become clear to both German Chancellor Angela Merkel and French President Nicolas Sarkozy that it may not be possible to get all 27 countries on board, EU sources say.

Even if that were possible, it could take a year or more to secure the changes while market attacks on Italy, Spain and now France suggest bold measures are needed within weeks.

As a result, senior French and German civil servants have been exploring other ways of achieving the goal, one being an agreement among just the euro zone countries.

"The goal is for the member states of the common currency to create their own Stability Union and to concentrate on that," German Finance Minister Wolfgang Schaeuble told ARD television on Sunday.

Another option being explored is a separate agreement outside the EU treaty that could involve a core of around 8-10 euro zone countries, officials say.

An even more pressing decision faces euro zone finance ministers when they meet on Tuesday.

Detailed operational rules for the euro zone's bailout fund, the European Financial Stability Facility (EFSF), are ready for approval, documents obtained by Reuters showed.

The approval of the rules will clear the way for the 440 billion euro facility to attract cash from private and public investors to its co-investment funds in coming weeks, which, depending on interest, could multiply the EFSF's resources.

With Germany rigidly opposed to the idea of the ECB providing liquidity to the EFSF or acting as a lender of last resort, the euro zone needs a way of quickly calming markets, where yields on Spanish, Italian and French government benchmark bonds have all been pushed to euro lifetime highs.

Policymakers hope progress toward tougher fiscal rules will also assuage investors. Schaeuble said a Stability Union could be a decisive step to winning more confidence from the markets.

"That means that every euro zone member has to do its homework on its budget discipline. We want to ensure that through treaty changes," he said.

RADICAL OVERHAUL

Reuters exclusively reported on November 9 that French and German officials were discussing plans for a radical overhaul of the European Union to establish a more fiscally integrated and possibly smaller euro zone.

"The Germans have made up their minds. They want treaty change and they are doing everything they can to push for it as rapidly as possible," one senior EU official involved in the negotiations told Reuters. "Senior German officials are on the phone at all hours of the day to every European capital."

While Germany and France are convinced that moving toward fiscal union - which could pave the way for jointly issued euro zone bonds and may provide more leeway for the European Central Bank to act forcefully - is the only way to get on top of the debt crisis, some other euro zone countries are unable or unwilling to move so rapidly toward that goal.

Not only Greece, Ireland and Portugal, which are receiving EU/IMF aid, but also Italy and Spain and some east European countries such as Slovakia, would either find it difficult under current economic conditions to meet the budget constraints Germany wants, or simply do not agree with the aim.

Consequently, the French and German negotiators are exploring at least two models for more rapid integration among a limited number of euro zone countries, with the possibility of folding that agreement into the EU treaty at a later stage.

TWO MODELS

One is based on the Pruem Convention of 2005, also known as Schengen III, a treaty signed among 7 countries outside the EU treaty but which was open to any member state to join and was later acceded to by 5 more EU states plus Norway.

Another option would be to have a purely Franco-German mini-agreement along the lines of the Elysee treaty of 1963 that other euro zone countries could also sign up to, officials say.

"The options are being actively discussed as we speak and things are moving very, very quickly," a European Commission official briefed on the discussions told Reuters.

One source said the aim was to have the outline of an agreement set out before December 9, when EU leaders will meet for their final summit of the year in Brussels.

Sarkozy, who has made two speeches in the past two weeks highlighting the need for more rapid fiscal integration in the euro zone, and has acknowledged that it may be inevitable that a 'two-speed Europe' emerges, is due to make another keynote address on December 1 which could provide a platform for laying out in more detail the ideas that he and Merkel are developing.

A senior German government official denied there were any secret Franco-German negotiations, but emphasized that both countries saw the need for treaty change as pressing and were exploring how to achieve that in the best way possible.

"Germany and France are continuing to focus on proposals for a limited treaty change that can be presented at the EU summit in December," the official said, emphasizing that there was a need to act quickly to get changes in place.

The ECB has bought the bonds of euro zone strugglers in intermittent fashion when they have reached crisis point. Economists say it has to act much more radically to turn the market tide but the central bank, and Germany, has opposed any such move. Commitments to binding fiscal rules by euro zone governments may be the cover it needs to change tack.

"If this bond run is not stopped it will really endanger the stability of the European and even the global financial system. Bold action by the ECB is definitely needed," Peter Bofinger, one of the five "wise men" who formally advise the German government on the economy, told Irish state broadcaster RTE.

Reuters reported a similar possibility on Friday, with euro zone officials saying that if much tighter fiscal integration could be achieved among euro zone states, it would give the ECB more room to maneuver and buy sovereign bonds.

While EU officials are clear about the determination of France and Germany to push for more rapid euro zone integration, some caution that the idea of doing so with fewer than 17 countries via a sideline agreement may be more about applying pressure on the remainder to act.

By threatening that some countries could be left behind if they don't sign up to deeper integration, it may be impossible for a country to say no, fearing that doing so could leave it even more exposed to market pressures.

"Some of this is just part of the posturing you hear -- it's pressure from Germany to go for treaty change as quickly as possible," the official involved in the negotiations said.

"To some extent you have to see these ideas as part of the bargaining chips that are being put on the table."

(Reporting by Luke Baker, Julien Toyer in Brussels, Carmel Crimmins in Dublin, Matthias Sobolewski, Andreas Rinke, Erik Kirschbaum and Gernot Heller in Berlin, Writing by Luke Baker, editing by Mike Peacock)

The electronics retailer, which was one of the biggest losers in 2010, drew in shoppers by being one of the companies that opened its stores at midnight Thanksgiving night, and unlike in 2010, it focused more on having lower prices for big TVs and other popular items.

"Last year, they weren't as responsive with their pricing as they needed to be. We are seeing a different set of behaviors from them this time around," Lawrence Creatura, a portfolio manager at Federated Clover Investment Advisors, said.

Overall, shoppers will have spent a record $52.4 billion, up 16.4 percent from 2010, from Thursday through Sunday, according to a survey for the National Retail Federation, conducted by online research firm BIGresearch.

Many retailers opened at midnight or earlier on Thanksgiving, pulling in younger people who were willing to stay up late for deals on electronics and toys instead of getting up before dawn on Friday.

"Consumers have finite cash. If you can be the retailer who gets that cash first, you are likely to be more successful in the holiday selling season," Creatura said.

Aside from Best Buy, analysts and investors also named Macy's Inc and Wal-Mart Stores Inc among those that were strong starters.

"Best Buy's success is partially due to locking in compelling exclusive deals, better than Amazon's, and having unique in-store-only offers forcing the visit," Credit Suisse analyst Gary Balter said.

Lee Johnson, 46, shopping at a mall in El Segundo, California, bought a computer at Best Buy on Sunday.

He said online shopping is usually a better idea, but he needed the computer for an employee who is starting tomorrow.

"I just didn't have time."

Fifty million Americans visited online retail sites on Black Friday, representing an increase of 35 percent versus a year ago, and online retail sales in the United States on Black Friday jumped 26 percent this year, comScore data showed.

Each of the top five retail websites saw double-digit gains in visitors versus last year, led by Amazon.com. Wal-Mart ranked second, followed by Best Buy, Target and Apple, comScore said.

"Amazon.com once again led the pack, with 50 percent more visitors than any other retailer, while also showing the highest growth rate versus last year," comScore Chairman Gian Fulgoni said.

Amazon has used "every method at hand, old and new to promote their business this holiday season so far," WSL Strategic Retail CEO Wendy Liebmann said, referring to the online chains promotions in print, online and circulars.

About 122.9 million Americans plan to shop on Cyber Monday this year, up from the 106.9 million who shopped on Cyber Monday in 2010, NRF vice president Ellen Davis said on Sunday, citing a survey conducted by BIGresearch.

POTENTIAL LOSERS

Retailers that opened late or held the line on promotions failed to impress.

"Office supply seemed among the least busy as they opened later and had fewer high-profile deals than in years past," Balter said.

Retailers Gap Inc and Sears also "need to step up," Craig Johnson, president of consulting firm Customer Growth Partners said, adding that he worries the two chains may be too late already as the "horse is out of the barn."

"We would be most cautious on Sears due to their cash flow and serious appliance competition," Balter said.

The holiday shopping season that traditionally kicks off on Black Friday -- the biggest day of the year for retailers -- is closely watched by investors as consumer spending accounts for about 70 percent of the U.S. economy.

The National Retail Federation, an industry trade group, forecast a 2.8 percent increase in sales for the November-to-December holiday season, down from the 5.2 percent increase in 2010.

Despite the strong start, many remain skeptical if retailers will be able to maintain the sales momentum seen this weekend.

"One swallow does not a holiday season make. After the deepest recession in decades, the solid Black Friday weekend is welcome news, but we're only in the second quarter of a long playoff game," Johnson said.

(Reporting by Dhanya Skariachan in New York, Alistair Barr in San Francisco and Lisa Baertlein in Los Angeles; Editing by Brad Dorfman, Maureen Bavdek and Diane Craft)

(This version supercedes an earlier correction to fix the style for the spelling of comScore from ComScore. An earlier correction fixed the year and spelling of the National Retail Federation and BIGresearch in fourth paragraph. The errors were also in an earlier version of the story.)